Property Valuation
A Texas residential appraiser notes that the subject property is the largest home on the block. The principle of REGRESSION suggests this property:
AWill sell for more than comparable smaller homes
BMay be worth less than its cost because it is overimproved relative to the neighborhood✓ Correct
CWill benefit from the conformity of the surrounding homes
DShould be appraised using the cost approach only
Explanation
The principle of regression holds that a higher-value property surrounded by lower-value properties will have its value dragged down by the surrounding properties. An overimproved property may not command the price its cost would suggest.
Related Texas Property Valuation Questions
- When appraising a single-family home, the sales comparison approach requires adjustments when comparable sales differ from the subject property. A positive adjustment means:
- The economic principle of conformity in real estate valuation states that:
- An appraiser using the income approach to value a commercial property calculates net operating income (NOI) by:
- In Texas, the 'cost approach' to value is considered most reliable for:
- In Texas, the relationship between cap rates and property values is:
- In Texas, county appraisal district values are subject to review through the:
- Functional obsolescence in real property refers to a loss in value caused by:
- The principle of substitution states that:
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